How to Improve Your Finances in a Day (2024)

There are less than 60 days left in 2021. Now is the time to take action to improve your finances before the end of the year. Although winning the lottery would be the easiest way to change your money, that’s not happening any time soon.

Instead, you need to take control of your money. Taking these small actions TODAY can have a big impact on your financial future. All of this should take less than an hour, but you can definitely do it all in one single day.

For more guidance on how to improve your finances, what order to do things in, and detailed steps for everything: START HERE.

The Financial Security Steps are the guide you need to completely reform your money.

1. Pull your credit report

To change your financial future, you need to first clean up your financial past.

Your credit report lists all the debts associated with your Social Security Number, including:

  • Open accounts
  • Closed accounts
  • Collections
  • Bankruptcies
  • Charge-offs
  • Tax liens
  • Judgments

A credit report doesn’t show your credit score, but it contains detailed information about your debts, like the loan holder, origination date, and highest balance. The report also notes late payments and account status, which impact your credit score.

How to get your credit report

Request your free credit report from AnnualCreditReport.com. You’ll be asked to enter your full name, address, date of birth, and address. Next, you’ll verify your identity by answering some questions about your past, like identifying previous addresses, employers, and vehicles.

How to Improve Your Finances in a Day (1)

Review the details

Read through your credit report carefully, looking for anything that looks wrong or inaccurate. Sometimes other people’s debt is reported under your SSN. Sometimes a discharged debt is still reported or a bankruptcy stays on your report longer than it should.

You might also find a debt you were unaware of or forgot about. Older accounts can be sent to collections, with the notification letters sent to an old address.

Clean up

Start a dispute with the credit reporting bureau to correct any inaccurate information. The process varies for each agency, so you may need to file 3 different disputes.

Contact the loan holder for any late or forgotten debts to arrange repayment terms. Paying the debt before it goes to collections, or settling it for less than owed, will go a long way toward preserving or improving your credit score.

Follow up

The first time, request a credit report from all three of the reporting bureaus (Experion, TransUnion & Equifax). With COVID-related financial uncertainty hanging in the air, you can get weekly free reports for a limited time.

After things go back to “normal,” you should rotate through the three bureaus. Request a report from a different source every 4 months, so you have newly updated information all the time. Keeping an eye on your credit report helps you resolve any problems quickly.

2. Calculate your net worth

Knowing and tracking your net worth, especially when you’re working on paying off debt, will be a big motivator to keep going. Net worth is the best measure of how you have improved your finances each month.

Net worth is a measure of what you own (assets) minus what you owe (liabilities). After pulling your credit report, it’ll be easy to list out your debts:

  • Mortgage
  • HELOC
  • Vehicle loans
  • Credit cards
  • Student loans
  • Outstanding tax bills
  • Tax liens
  • Medical debt
  • Personal loans
  • 401(k) loans

Finding all of your assets will take more work. List all your assets, even if they have a loan against them:

  • Real estate
  • Vehicles
  • Bank accounts & cash
  • Retirement accounts
  • Other investment accounts
  • Other possessions worth more than $5000 (for simplicity)

You’ll have to log into your bank accounts, your retirement accounts, your investment accounts. You can estimate the value of your home with Zillow and the value of your vehicles with Kelly Blue Book.

How to Improve Your Finances in a Day (2)

You can use this free worksheet to help with your calculations or transform it into a spreadsheet to speed up the math. I like to update our net worth every month, so I can see improvements over time.

3. Make a budget to improve your finances forever

Call it a “spending plan” if that makes it more palatable, but you need to tell your money where to go if you’re ever going to improve your finances.

A budget will help you keep your expenses in check and spend less than you earn so you can pay off debt, save, or invest. You’ll have to track expenses before and after making your budget, so you know what you’ve spent and what’s left throughout the month.

Make sure to budget for:

  • Recurring bills, both monthly & annual. Read up on saving for recurring expenses to use my innovative Double Account Method to get a month ahead on your bills and have a cushion.
  • Debt payments
  • Food
  • Household items
  • Vehicle expenses
  • Fun money
  • Medical expenses
  • Clothing
  • Personal care
  • Gym, workout apps, etc.
  • Pets
  • Entertainment
  • Babysitting
  • Miscellaneous
How to Improve Your Finances in a Day (3)

There are different ways to split up your income to make a budget, so it’s important to choose a method that works for you. Zero-based budgets are more intense to prepare, while the 50-20-30 budget is a good middle ground. The 80-20 method is super simple, but you lose detail.

It doesn’t really matter which method you choose, how many categories you use, or how you track your budget (pen & paper, spreadsheet, or website/app)… as long as you create a budget, follow it, and assess your spending frequently.

4. Evaluate your monthly expenses

When you’re tracking your expenses, creating a budget, and following up on it, it’s a great time to review (and evaluate) your monthly expenses.

If you find yourself needing to cut down on expenses, monthly bills are an easy area to start with. Those recurring charges really add up from month to month, so cutting them can have a big effect on improving your finances.

It’s easy to sign up for a subscription, forget about it, or quit using the service while still paying for it. Go through the expenses you’ve tracked and budgeted for, and make a list of monthly, recurring expenses.

Now, look at that list and really dig in.

  • Are you actually using that service?
  • Do you really need it?
  • Are you getting your money’s worth?

Cancel right away

As soon as you identify a monthly expense that doesn’t fit in your life, cancel it today. Don’t delay or put it off until later; call or log in to cancel that subscription right away.

Be honest with yourself about whether you’re getting your money’s worth from the subscription, especially if it’s something related to a goal. Who hasn’t signed up for a fitness or food tracking subscription with the best of intentions, only to quit using it after a few weeks? Stop paying for things you’re not using!

Ask for a better rate

If you decide to keep that expense, make sure you’re getting the best value. Cell phones are a good example: you may not need unlimited data if you’re a stay-at-home mom who can use wi-fi when at home. Paying for 2 GB of data will save a lot compared to an unlimited plan.

Call the provider and ask if any discounts are available or if your bill can be reduced. Threaten to cancel only if you’re willing to follow through. A retention team member will usually be able to offer the best deal… if they’re desperate enough to keep your business.

How to Improve Your Finances in a Day (4)

5. Make a debt payoff plan

If you have any non-mortgage debt, make debt payoff your main goal for the new year. Make your goal for today the creation of a debt payoff plan.

Carrying debt robs you of the real spending power of your income, costs hundreds or thousands in interest and slows progress on your other financial goals, like retirement or college savings.

You’re (probably) not going to pay off all your debt in just a day, but you can make a debt payoff plan! Having a plan will guide you & keep you on track as you pay off debt.

A debt payoff plan works with your budget. Your budget shows how much you can put toward debt each month. The debt payoff plan directs that money strategically to each debt.

The Debt Payoff Planner is the perfect free resource to walk you through creating your own plan. It will help you list out all your debts (which you already have from your credit report and from calculating your net worth) and show you the 3 main debt payoff methods:

  • Debt snowball: pay off debts in balance order, smallest to largest
  • Debt avalanche: pay off debts in interest rate order, largest to smallest
  • Hybrid method: make your own plan based on personal feelings, motivation, and changing interest rates

Automate payments to improve your finances

Your debt payoff budget category should be enough to at least cover minimum payments on all of your debts. Any extra money should also go toward debt. As you pay off one debt, put that minimum payment amount toward the next debt each month.

Scheduling automatic minimum payments for each debt ensures you don’t forget or fall behind on payments. When you pay off a debt, change the automatic payment amount for the next debt.

Making all of this automated keeps things simple and basically forces you to follow your debt payoff plan.

Download Debt Payoff Planner

6. Start saving for retirement

I don’t care how old you are – if you don’t have a retirement account yet, start one. Today.

You don’t have to go all-in, especially if you’re young. Time is on your side when you start investing in your twenties, and less so if you wait until your forties.

When you still have non-mortgage debt, I recommend investing enough in retirement to get your employer’s match, if there is any offered. Often, this is only 3-5% of your pay, so you likely won’t even notice the missing money in your budget.

If you don’t have an employer match or an employer, start investing 3-5% yourself. Your employment type determines the type of tax-advantaged retirement accounts you can use. The type of account determines the amount you can contribute each year, but that’s not a big concern when you’re just starting.

Keep it simple to improve your finances

The easiest way to start a retirement account is through your employer. Human resources should be able to direct you, but you can open private retirement accounts as well.

To keep things simple, choose a target year index fund. An index fund is a group of stocks that are tracked; you buy a portion of that group, which means gains and losses are averaged out between all the stocks. They’re more stable, which is good for long-term planning.

Target year index funds are designed to gradually decrease risk as a specific retirement year approaches, making them a safer bet as you get closer to retirement. Choose a target year fund that is close to the time you’d like to retire… and be realistic about that timing. If you’re just starting to save for retirement in 2021 at age 30, a 2030 target fund probably isn’t the best choice.

There’s a lot of advice out there on how to improve your finances. Unless you receive a windfall AND magically change your spending habits overnight, there are no quick and easy solutions.

Instead, following the basics will improve your finances over time. Take these 6 actions today, then follow through. You have to put in the work to get the benefits… but those benefits are pretty great.

Imagine not worrying about paying the bills each month.

Envision your life without money stress.

What if you had enough saved to buy your next car, make a down payment on a home, and could put your kids through college debt-free?

Who doesn’t want to retire in comfort while you can still enjoy yourself?

THAT is what improving your finances can do for you.

How to Improve Your Finances in a Day (2024)

FAQs

What is the 50/30/20 rule? ›

The rule is to split your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings. 1. This intuitive and straightforward rule can help you draw up a reasonable budget that you can stick to over time in order to meet your financial goals.

What is the best way to improve your finances? ›

These 8 simple steps can help better your finances in less than a...
  1. Start an emergency fund. Time to open a savings account: 15 minutes. ...
  2. Use a budgeting app. ...
  3. Check your credit score. ...
  4. Set goals. ...
  5. Automate your savings. ...
  6. Contribute to your retirement account. ...
  7. Start using your credit card like a debit card. ...
  8. Begin investing.

How do I maximize my money? ›

7 Money Management Tips to Improve Your Finances
  1. Track your spending to improve your finances. ...
  2. Create a realistic monthly budget. ...
  3. Build up your savings—even if it takes time. ...
  4. Pay your bills on time every month. ...
  5. Cut back on recurring charges. ...
  6. Save up cash to afford big purchases. ...
  7. Start an investment strategy.
Jun 27, 2023

How to save money quickly? ›

See which of these suggestions could make the biggest financial impact on your bottom line.
  1. Cancel unnecessary subscription services and memberships. ...
  2. Automate your savings with an app. ...
  3. Set up automatic payments for bills if you make a steady salary. ...
  4. Switch banks. ...
  5. Open a short-term certificate of deposit (CD)
Feb 26, 2024

How to budget $4000 a month? ›

How To Budget Using the 50/30/20 Rule
  1. 50% for mandatory expenses = $2,000 (0.50 X 4,000 = $2,000)
  2. 30% for wants and discretionary spending = $1,200 (0.30 X 4,000 = $1,200)
  3. 20% for savings and debt repayment = $800 (0.20 X 4,000 = $800)
Oct 26, 2023

What is the 40 40 20 budget rule? ›

The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.

How do I stop struggling financially? ›

How We Make Money
  1. Prioritize what you can control on discretionary spending.
  2. Find ways to earn more money.
  3. Pay essential bills.
  4. Save money during trying times.
  5. Track your money-saving progress.
  6. Talk to your lenders.
  7. Consult with an expert financial advisor.
May 21, 2024

How do I rebuild myself financially? ›

5 steps to help you recover from a financial setback
  1. You can succeed. Accept the reality of your challenge and handle it quickly and aggressively. ...
  2. Know your financial resources. ...
  3. Set up a budget and prioritize expenses. ...
  4. Take action now. ...
  5. Seek out professional help.

How do you fix bad finances? ›

  1. Identify the problem. ...
  2. Make a budget to help you resolve your financial problems. ...
  3. Lower your expenses. ...
  4. Pay in cash. ...
  5. Stop taking on debt to avoid aggravating your financial problems. ...
  6. Avoid buying new. ...
  7. Meet with your advisor to discuss your financial problems. ...
  8. Increase your income.
Jan 29, 2024

How to save $10,000 fast? ›

6 steps to save $10,000 in a year
  1. Evaluate income and expenses. To make room for saving, you'll need a meticulous budget that outlines all your sources of income and all your expenditures. ...
  2. Make an actionable savings plan. ...
  3. Cut unnecessary expenses. ...
  4. Increase your income. ...
  5. Avoid new debt. ...
  6. Invest wisely.
Apr 2, 2024

How can I change my life financially? ›

39 Ways to Improve Your Personal Finances
  1. Get your overspending under control. ...
  2. Create a new budget. ...
  3. Find a budgeting app you like. ...
  4. Make a will. ...
  5. Protect your savings from inflation. ...
  6. Prepare for rising interest rates. ...
  7. Prepare now for your next major life event. ...
  8. Boost your retirement savings.

How can I increase my money in life? ›

Here are six ways to increase your earning potential and improve your life at the same time.
  1. Learn a Marketable New Skill. ...
  2. Seek Out the Right Kind of Freelance Work. ...
  3. Dress the Part. ...
  4. Ask for What You're Worth. ...
  5. Or, Get a New Job. ...
  6. Be Happier to Make More Money.

How to save $1,000 ASAP? ›

Financial expert Dave Ramsey has a lot of ideas on the subject, and here are some of the most practical ways to save your first $1,000 quickly.
  1. Cancel Subscriptions. ...
  2. Bring Your Own Lunch. ...
  3. Avoid Coffee Out. ...
  4. Re-Sell Old Items. ...
  5. Shop at Cheaper Grocery Stores With Rewards Programs. ...
  6. Buy Generic. ...
  7. Join a Carpool.
Dec 28, 2023

How to save $5,000 ASAP? ›

How to Save $5000 in 3 Months [2024]
  1. Create a Budget and Plan.
  2. Pick up a Side Hustle.
  3. Sell Things Around Your Home.
  4. Refinance Debts.
  5. Cut Unnecessary Expenses.
  6. Reduce Living Expenses.
  7. Try an Envelope Savings Challenge.
  8. Use Cash Back Apps.
Jul 3, 2024

What is the 30 day rule? ›

The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.

Is the 50/30/20 rule still realistic? ›

"People may be unable to use the 50/30/20 budget right now because their needs are more than 50% of their income," Kendall Meade, a certified financial planner at SoFi, said in an email.

What is the disadvantage of the 50 30 20 rule? ›

It may not work for everyone. Depending on your income and expenses, the 50/30/20 rule may not be realistic for your individual financial situation. You may need to allocate a higher percentage to necessities or a lower percentage to wants in order to make ends meet. It doesn't account for irregular expenses.

How do you distribute your money when using the 50 20 30 rule? ›

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

How much money should you have left over after bills? ›

As a result, it's recommended to have at least 20 percent of your income left after paying bills, which will allow you to save for a comfortable retirement. If your employer offers matching 401(k) contributions, take advantage so you can maximize your investment dollars.

Top Articles
Latest Posts
Article information

Author: Jerrold Considine

Last Updated:

Views: 6033

Rating: 4.8 / 5 (58 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Jerrold Considine

Birthday: 1993-11-03

Address: Suite 447 3463 Marybelle Circles, New Marlin, AL 20765

Phone: +5816749283868

Job: Sales Executive

Hobby: Air sports, Sand art, Electronics, LARPing, Baseball, Book restoration, Puzzles

Introduction: My name is Jerrold Considine, I am a combative, cheerful, encouraging, happy, enthusiastic, funny, kind person who loves writing and wants to share my knowledge and understanding with you.